PAY AS YOU GO (PAYG) WITHHOLDING

PAYG withholding
As an employer, you have a role to play in helping your payees meet their end-of-
year tax liabilities. You do this by collecting pay as you go (PAYG) withholding
amounts from payments you make to:
your employees
other workers, such as contractors, that you have voluntary agreements with
businesses that don't quote their Australian business number (ABN).
A few things to remember:
You must register for PAYG withholding before you are first required to make
a payment that is subject to withholding. This is required even if you don't
withhold an amount from a payment made.
If you cease to be an employer you should cancel your PAYG withholding
registration.
Before you enter into a work agreement or contract, you need to check that
the worker is legally allowed to work in Australia.
PAYG withholding is different to payroll tax, which is a state tax.

It’s also important that you keep the right records.

Next step:
How to register or cancel PAYG withholding

Find out about:

Payments you need to withhold from
Annual reporting
Paying and reporting withheld amounts
PAYG payment summaries
When a worker leaves
See also:
Single Touch Payroll employer reporting guidelines
Payroll tax – on business.gov.au
Learn about employing migrants – Department of Home Affairs website
Record keeping for business
Your workers
Pay as you go withholding
You must register for pay as you go (PAYG) withholding before you're first required
to make a payment that is subject to withholding. This is required even if you do
not withhold any amount from a payment made.

You can register your business for an ABN, GST, PAYG and a business name, all at
the same time on the Australian Business Register.

If you need to withhold tax but don't need an ABN, you must register for a PAYG
withholding account.
How to register or cancel PAYG withholding
If you have an ABN
If your business has an active ABN, you can register or cancel your PAYG
withholding business account:
online through our Business Portal
through your registered tax agent or BAS agent
using your Standard Business Reporting compatible software
by phoning our business line if you're an authorised business contact.

You can also order and complete the:

Add a new business account (NAT 2954) form
Application to cancel registration (NAT 2955) form.

Use our publication ordering service for business to obtain these forms
ATO Business Portal
ATO Publication Ordering Service
If you don't need an ABN but have to withhold tax
You must register for a PAYG withholding account if you don't need an ABN but
have to withhold tax from a payment.

You must withhold tax if:

you self-manage your National Disability Insurance Scheme funds and
directly employ staff
a supplier has not quoted their ABN
you employ, or intend to employ, a person such as a nanny, cleaner, cook or
gardener
you pay royalties, dividends or interest to non-residents, or withhold from or
report investment income to Australian residents.
You can register your PAYG withholding account and not have an ABN by:
phoning our business line 13 28 66 and speaking to a customer service
representative
completing an Application to register a PAYG withholding account (NAT
3377)
contacting your registered tax agent or BAS agent.

To cancel your PAYG withholding account, you can:

phone our business line 13 28 66 and speak to a customer service
representative
complete an Application to cancel registration (NAT 2955) form
ask your registered tax agent or BAS agent.
See also:
National Disability Insurance Scheme
Withholding from payments to household employees
Phone us

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Payments you need to withhold from
As a payer, you may need to withhold amounts from payments you make to your
workers, other businesses and other payees, and send the withheld amount to us.

Withholding by employers
Your withholding obligations depend on whether your worker is an employee or
contractor. If your worker is:
an employee, you generally have to withhold amounts from payments you
make to them
a contractor, you generally do not withhold amounts from payments you
make to them (unless they request withholding by entering into a voluntary
agreement with you).
To check if your worker is an employee or contractor, you need to review the
whole working arrangement. The easiest way is to use our decision tool.
The most common payments you withhold amounts from are those to:
your employees
your directors
businesses that don't quote their ABN to you
contractors who have a voluntary agreement with you.

If you operate your business as a sole trader or partnership and you draw
amounts from the business, this is not a wage and you don't have to withhold
from these drawings. You make some provision for your income tax liability
through PAYG instalments.
Other payments that may need tax withheld
Payments, other than income from employment, may also need tax withheld,
including:
investment income to someone who does not provide their TFN
dividends, interest and royalties paid to non-residents of Australia
payments to certain foreign residents for activities related to gaming,
entertainment and sports, and construction
payments to Australian residents working overseas
super income streams and annuities
payments made to beneficiaries of closely held trusts.

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Find out about:
 Payments to employees
 Payments with special rules
 Payments under a voluntary agreement
 Labour-hire firms and their workers
 Compensation, sickness and accident payments
 Withholding from investment income
 Withholding from suppliers

See also:
 Employee or contractor
 Super for employers
 TFN withholding for closely held trusts
 Amounts that you do not pay tax on
 Removing tax deductibility of non-compliant payments
Payments to employees
If you need to withhold amounts from payments to employees, including those
who are overseas or foreign residents, you need to get them to complete a Tax
file number declaration. In some cases they may also need to complete a
Withholding declaration.

These declarations will help you to work out how much tax to withhold by
indicating whether there are other factors you need to consider, such as
withholding where employees:
are under 18 years of age
have study and training support loans such as Higher Education Loan
Program (HELP), Trade Support Loan (TSL) or Financial Supplement debts
are claiming tax offsets.
Find out about:
Types of payments to employees
Calculating amount to withhold
Tax file number and withholding declarations
Withholding from leave payments for continuing employees
Allowances and reimbursements
Variations

See also:
Study and training support loans - compulsory repayments
Types of payments to employees
As well as wages and salary, you must withhold amounts from other payments to
employees, such as:
allowances
back payments, commissions, bonuses and similar payments
long service leave and holiday pay
repayment of an overpayment
payments when an employee leaves.

If you operate your business as a company or trust with a corporate trustee, it is

likely you are either an employee or director of that business. If the company or
corporate trustee pays you a wage or director's fees, there is the same
responsibility to withhold amounts from these payments and send them to us.
See also:
Repayment of overpaid amounts
PAYG withholding for external administrators and trustees of bankrupt
estates

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Calculating amount to withhold
The easiest and quickest way to work out how much tax to withhold is to use our
online tax withheld calculator. Alternatively, you can use the range of tax tables
we produce.

These take into account the Medicare levy, study and training support loans, and
tax-free threshold.

Next steps:
Tax withheld calculators
Tax tables
Medicare levy
Note: Due to wide range of this topic, learn the following one at a time:

1. PAYG Monthly Withholding for Employees

Tax withheld calculators
The tax withheld calculator applies to payments made in the 2020–21 income year.

For information about important changes for the 2020–21 income year refer to Tax
tables. In 2019 new tax tables were created for Study and training support loans,
which replaced the tax tables for HELP/TSL/SSL and SFSS. They also incorporated
ABSTUDY SSL and VET Student Loan (VSL).

If you employ working holiday makers, other tax tables apply. For more information
refer to Tax table for working holiday makers.

Our tax withheld calculators

If you're an employer or another withholding payer, our tax withheld calculators can
help you work out the tax you need to withhold from payments you make to
employees and other workers.
Choose the right calculator
There are 2 withholding calculators you can use depending on your situation:
1. Tax withheld for individuals calculator – for employees and other workers
including working holiday makers. It will take between 2 and 10 minutes to
use this calculator.
2. Voluntary agreement calculator – for workers, such as subcontractors, who
are subject to a voluntary agreement. It will take between 1 and 2 minutes to
use this calculator.

To use these calculators, you will need the information your employees or other
workers supply in their:
Tax file number declaration
Withholding declaration
Medicare levy variation declaration
Tax withheld for individuals calculator
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Voluntary Agreement Calculator
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Tax file number declaration
Complete a Tax file number declaration so your payer can work out how much tax to
withhold from payments they make to you.

How to get this form

You can:
complete a pre-filled form through ATO online services linked to myGov
- in our online services, select Menu, then select Employment and then select
New employment

download the Tax file number declaration (NAT 3092, PDF, 402KB)
and either
- fill in the form on screen
- print the form in A4 size and fill it in by hand
How to get this form
You can:
complete an electronic TFN declaration form if your payer currently lodges their
TFN declaration reports electronically – speak with your payer for more details
get a paper copy of the Tax file number declaration (NAT 3092), including both
the instructions and form, by either ordering online or phoning 1300 720 092,
24 hours a day, 7 days a week. If you do this
- take note of the name and number Tax file number declaration (NAT
3092) before ordering the product
- only order what you need as this form is reviewed annually.
Completing your Tax file number declaration form online
If you are completing the pre-filled form in our online services, you'll need your:
employers Australian business number (ABN)
employment type (for example, full time, part-time, casual)
employers default super fund details
name
unique superannuation identifier (USI) of your nominated super fund
ABN.

You'll need to print out the completed form summary and return this to your
payer so they can work out how much tax to withhold from payments they make
to you.
Filling in your form on screen

If you are filling in this form on screen:

download a copy of this form to your computer
when complete, print a copy in A4 size
sign and date the declaration
give your completed form to your payer.
Filling in your form by hand

If you are filling in this form by hand:

print clearly in BLOCK LETTERS using a black or dark blue pen
place X in all applicable boxes
do not use correction fluid or covering stickers
sign and date the declaration
give your completed form in A4 size to your payer.

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Withholding declaration
Complete a Withholding declaration form (NAT 3093) if you want your payer to
adjust the amount of tax withheld from payments made to you.

You can complete this form either:

online through ATO online via myGov. The form is part of the New
Employment forms under the Employment menu
by downloading the Withholding declaration (NAT 3093, PDF 347KB)
form and instructions. This is a fillable PDF that can be completed online,
saved and printed. You will need to select each field to complete. If you
prefer to complete by hand, print a blank copy of the form.
Find out about:
Who should complete this declaration?
How to complete this form
More information
Who should complete this declaration?
You should complete this declaration if you want:
your payer to adjust the amount withheld from payments made to you
to advise your payer of a change to information you previously provided in a
Tax file number declaration (NAT 3092).

You must lodge a new declaration if either:

you leave your current payer and start to receive payments from a new
payer
your circumstances change.

If you give the wrong information, you may have insufficient amounts withheld
from payments made to you and this may result in a significant tax debt at the
end of the income year.
Is this the right form for you?
Complete this declaration if the following applies:
you have completed a Tax file number declaration (NAT 3092) with your current
payer and you now want to
advise your payer that you have become, or ceased to be, an Australian
resident for tax purposes
claim or discontinue claiming the tax-free threshold
advise your payer of your Higher Education Loan Program (HELP), VET
Student Loan (VSL), Financial Supplement (FS), Student Start-up Loan (SSL) or
Trade Support Loan (TSL) repayment obligations, or make changes to them
claim your entitlement, or vary your entitlement to a tax offset (including
the seniors and pensioners tax offset – SAPTO).
Downward variation
You can apply to reduce the rate or amount of withholding if you believe that you
will have too much tax withheld from your pay for the year. To apply, you must
complete a PAYG withholding variation application (NAT 2036)
and send it to us.

Upward variation
If you want to increase the rate or amount of withholding from your pay you can
now do so by providing a written request to your payer.

See also:
Upward variations

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Medicare levy variation declaration
The Medicare variation levy declaration (NAT 0929) allows you to vary the
amount withheld from your pay for the Medicare levy.

You can complete this form by either:

ATO online via myGov. The Medicare levy variation declaration form is part
of the New Employment forms under the Employment menu.
downloading a printable version of the Medicare levy variation declaration
(NAT 0929, PDF 423KB) form and instructions. This is a fillable PDF that
can be completed online, saved and printed. If you prefer to complete by
hand, print a blank copy of the form.
Find out about:
Who should use this declaration?
How to complete this form
Definitions
More information
Who should use this declaration?
You should complete this declaration if you want to:
increase the amount withheld from payments to you to cover your Medicare levy
surcharge
claim an exemption from the Medicare levy
reduce the pay as you go (PAYG) amount withheld that covers Medicare levy from
payments to you
claim an exemption from compulsory Higher Education Loan Program (HELP), VET
Student Loan (VSL), Student Start-up Loan (SSL), Financial Supplement (FS) or
Trade Support Loan (TSL) repayments.

You must lodge a new declaration if either:

you leave your current job and start to work for someone else
your circumstances change.
If you give the wrong information, you may have a tax debt at the end of the income
year.
Claiming an exemption or varying the amount withheld
Complete this declaration to claim an exemption from the Medicare levy or to vary
the amount withheld for the levy if one of the following applies:
 you are in one of the Medicare levy exemption categories
 the combined weekly income of you and your spouse is less than $891 or, if you
maintain a child or student, less than the relevant amount shown in Table A
 you are a sole parent with a weekly income of less than $973 or, if you maintain
more than one child or student, less than the relevant amount shown in Table A
 you have to pay the Medicare levy surcharge and want to increase the amount
withheld from payments to you to cover the surcharge (for more information,
see Question 4).
Also complete this declaration if you want to claim an exemption from HELP, VSL, FS,
SSL or TSL repayments for a year because you are entitled to a reduction of the
Medicare levy or you do not have to pay the Medicare levy, due to having a spouse or
dependants and low family income.
Introduction
Most people in Australia have the Medicare levy automatically withheld from
their wages. However, some people:
may qualify for an exemption from the levy
can pay a reduced levy
may have to pay the Medicare levy surcharge.

Refer to Table A to check if your weekly income qualifies you to either:

be exempt from the Medicare levy
vary the amount withheld for the levy.
Table A: Weekly income

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What the calculator does
The tax withheld calculator takes into account the:
Income tax rates
Medicare levy
Study and training support loan contributions
Worker status
- Resident
- Non-resident
- Working holiday maker
Registration of employers of working holiday makers
Tax-free threshold
Tax offset entitlements.
Disclaimer
The calculated results are based on the information you provided at the time of
calculation. You should use these results as an estimate and for guidance
purposes only.

See also:
ATO app
How to use the tax withheld for individuals calculator
Terms we use
More information

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Tax tables
We produce a range of tax tables to help you work out how much to withhold
from payments you make to your employees or other payees. A tax withheld
calculator that calculates the correct amount of tax to withhold is also available.

Tax tables with an asterisk (‘*’) have downloadable look-up tables available in
portable document format (PDF). To get a copy of the PDF, select the tax table
you need and go to the heading ‘Using this table’. The link to the PDF is in the ‘Get
it done’ section.

Tax tables for previous years are also available at Tax rates and codes.
On this page:
Important information for this year
Tax tables updated that apply from 1 July 2020
Tax tables that continue to apply from 1 July 2020
Important information for this year
There are currently no changes to the tax rates or income thresholds for the 2020–21 income
year. Changes announced in 2019 to the low and middle income tax offsets were only in
respect of the amount of that offset. This is claimable when individuals lodge their tax return.

In 2019, the HELP, SSL and TSL tax tables were renamed ‘Study and training support loans tax
tables’. They incorporate HELP, VSL, SFSS, SSL, ABSTUDY SSL and TSL. There are no longer
separate SFSS tax tables.

You now need to refer to the applicable 'Study and training support loans tax table' wherever
any existing tax tables refer to HELP, SSL, TSL or SFSS tax tables.

With the annual indexing of the repayment incomes for study and training support loans, the
only updates for the 2020–21 year are to:
 Schedule 8 – Statement of formulas for calculating study and training support loans
components (NAT 3539)
 the study and training support loans weekly, fortnightly and monthly tax tables.
Changes to age limits for genuine redundancy and early retirement scheme payments
Legislation was passed in October 2019 that extended the concessional tax treatment of
genuine redundancy and early retirement scheme payments. This was extended to
people who had reached the age based limit of 65 years but not the age-pension age.
The changes apply to payments received by employees who are dismissed or retire on or
after 1 July 2019.

This may impact withholding calculations for some employees when using Schedule 7 –
Tax table for unused leave payments on termination of employment and Schedule 11 –
Tax table for employment termination payments.

Refer to further information before using these schedules: Genuine redundancy and
early retirement scheme payments – alignment with the Age Pension age.

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Tax tables updated that apply from 1 July 2020
The following tax tables were updated and apply from 1 July 2020.

Statement of formulas
*Statement of formulas for calculating study
and training support loans components NAT 3539
Sample data for Schedule 8 – Statement of formulas
for calculating study and training support loans
components (XLSX 32KB) NAT 3539

Study and training support loans

*Study and training support loans weekly tax table NAT 2173
*Study and training support loans fortnightly tax table NAT 2185
*Study and training support loans monthly tax table NAT 2186
Tax tables that continue to apply from 1 July 2020
The following tax tables were not updated but continue to apply from 1 July 2020.

Statement of formulas
*Statement of formulas for calculating amounts to be withheld NAT 1004

Regular payments
*Weekly tax table NAT 1005
*Fortnightly tax table NAT 1006
*Monthly tax table NAT 1007
*Tax table for daily and casual workers NAT 1024
Medicare levy
*Weekly tax table with no and half Medicare levy NAT 1008
*Fortnightly tax table with no and half Medicare levy NAT 74228
*Medicare levy adjustment weekly tax table NAT 1010
*Medicare levy adjustment fortnightly tax table NAT 1011
*Medicare levy adjustment monthly tax table NAT 1012

Superannuation payments
Tax table for superannuation lump sums NAT 70981
Tax table for superannuation income streams NAT 70982
Payee or industry specific tax tables
Tax table for working holiday makers
Note: Do not apply the working holiday maker (WHM) rates to any tax-free component of an
ETP. Tax-free components are excluded from any withholding calculations.
Apply the same withholding treatment for allowances for WHM that applies to other
employees. Refer to Withholding for allowances.
The tax table will incorporate these instructions when it's next updated.

*Tax table for seniors and pensioners NAT 4466

*Tax table for actors, variety artists and other entertainers NAT 1023
*Tax table for individuals employed in the horticultural or shearing industry NAT 1013
Tax table for Joint Petroleum Development Area
Note: There has been a redistribution of taxing rights between Australia and Timor-Leste,
where the share of Timor-Leste's taxing rights increased from 90% to 100% from 30 August
2019. The change will be incorporated into the tax table when it's next updated. NAT 7288
Types of payment specific tax tables
Tax table for return to work payments NAT 3347
Tax table for back payments, commissions, bonuses and similar payments NAT
3348
Tax table for unused leave payments on termination of employment NAT 3351
Tax table for employment termination payments NAT 70980
Tax table for annuitiesNAT 3350
*Tax table for payments made under voluntary agreements NAT 3352
Tax table for additional amounts to withhold as a result of an agreement to
increase withholding NAT 5441
Note: Go to Seasonal Worker Programme and Pacific Labour Scheme for
withholding rates for individuals employed under those schemes.
Find out more:
Key super rates and thresholds for 'Super' cap amounts, 'Employment
termination payments' cap amounts, and 'Genuine redundancy and early
retirement scheme' payment limits for the 2020–21 income year
Tax withheld calculators
Payments with special rules
PAYG withholding for Community Development Employment Project
PAYG payment summaries: forms and guidelines
Single Touch Payroll

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Medicare Levy